Removing Barriers Blog

CUNA Joins WOCCU in Opposing Expanded FATCA Reporting Requirements

Posted May 31, 2016 by CUNA Advocacy

Today,
CUNA and the World Council of Credit Unions (WOCCU) sent a joint letter to congressional leaders in both chambers, in response
to Treasury Secretary Jack Lew’s May 5th letter to House Speaker Paul Ryan
requesting new legislation to increase the Foreign Account Tax Compliance Act
(FATCA) reporting requirements on U.S.-based banks and credit unions.

The
letter urged congressional leaders to oppose any increase in FATCA reporting
requirements on U.S.-based credit unions and banks, because it would increase
regulatory burdens on American credit unions and banks without resulting in a
single dollar of new tax revenue to the Treasury.

FATCA
already limits the ability of U.S. citizens to evade taxes through offshore
banking by requiring foreign banks to report such accounts to the U.S.
government, either directly or pursuant to a FATCA Intergovernmental
Agreement. U.S.-based banks and credit
unions also already report interest income earned by non-resident aliens to the
Internal Revenue Service (IRS). This
information is currently shared with many foreign governments pursuant to FATCA
reciprocity.

Secretary
Lew has asked for new legislation to expand domestic application of FATCA
further so that U.S.-based banks and credit unions are required to report
non-resident aliens’ account balances to the IRS, even when the accounts do not
earn interest or dividends. The IRS
would share this information with foreign governments, including foreign
governments that are hostile to the United States, even though
non-interest-bearing accounts do not generate taxable income.

The
compliance burdens on American banks and credit unions from domestic expansion
of FATCA, however, would be significant because every bank and credit union in
the United States would be expected to review their accounts on a regular basis
and make reports to the IRS even if they do not hold any non-resident-alien
accounts. The result will be a diversion
of resources at credit unions and banks that otherwise would have been used to
provide loans and other financial services.

Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.